SBUX had a 3.84% short position on Oct. 8 (*), and since the stock is up ten bucks since then, one might assume that's even less now. Avg vol is 3.26 million, so today's the day to watch for a big black candlestick and high volume alert (over 7-8 million). These potential breakdown stocks have been trading in a pattern though. They come creeping back up, and usually on lighter volume. Take QCOM as an example. I've been tracking it, notice the big black candlestick and high volume alerts.
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It's been churning upwards on light volume since and now today it looks like it's going to take a stab up towards 40. If the volume is restrained, say well below the 15.65 million average, then you can short or buy puts (if implied volatility is below 30%), or write naked calls (if the IVs are at least 40%) on this move. SBUX may play out the same way. Thoughts from chart guys on the thread welcomed?
(*) Changes in short position in the last month will be revealing, we will see how much of this rally has been short covering. I think that's the game of late, just ramp up and jam shorts, it's an organized and concerted effort.
(**) Next Tuesday we see the 39.08 million shares of GOOG unlocked. Of course they won't all sell and not on the same day, but I think you will a lot of supply leaking out over the next week or two, and it's followed by 24.87 million more on Dec. 16th. If today's prices can hold up, that's potentially up to eleven billion bucks by year end. If many try and hold out for the next tax year (no advantage really, as you have to pay estimated taxes anyway), then that number goes up to $15 billion by 1/15. This speculative high flyer market ought to get real heavy. |
